When selling a company there is a tried and true process that includes writing a book. It’s only one of many steps, but it is a critical component in the process that requires talent and a lot of business and financial writing experience. That’s right all you business owners out there who don’t write much more than limited emails on any given day. It also involves preparing “normalized” historical financial statements with a detailed and accurate management discussion and analysis (“MD&A”) that purposefully sets the stage for your financial projections. Projections are an entirely separate topic, so let’s stay focused on the qualitative nature of telling your story to prospective buyers.

I was once told by a boss some years ago “A strong book isn’t going to sell a weak company”. What he meant was for me to wrap it up and move on, we’ve got better things to do. The problem was then, and remains today with every single company interested in selling, is that the opposite is also true: a weak book will ruin the opportunity to sell an otherwise strong company.

Why is this? How is a potential buyer going to see things the way you want them to if you don’t outright tell them in a credible manner?

So I offer this piece of advice to every business owner contemplating a sale: be absolutely certain your “Confidential Information Memorandum”, “CIM” or “book” is written, stylized and illustrated to the highest standard. Prospective buyers demand it. They don’t want fluff, but facts. They don’t want your view of the “pro forma” business you would prefer to sell than the reality that will be revealed. They already like the what. They want to understand how you built the business you would like to sell and how it should fare in the future under their leadership. Your book is your company’s biography and road map to the future. Tell your story with inspiration, tell it with expertise and tell it with credibility.

Like any sale in life, the easier the decision is for the buyer, the better the outcome and the better the experience. Most businesses don’t sell. If you are truly a motivated seller and can demonstrate the viability of a value building future for your company under someone else’s leadership, don’t underestimate the importance of a professional, quality, on-point book.

How will you know you’ve got a professional, quality, on-point book? At the very least start with a modern template that sets up the author for success. Or, have ALIGNMT prepare it for you. Remember, “A weak book will ruin the opportunity to sell a good company”.

One of the keys to a well written CIM is the style used to narrate the relationship between the practical elements of your business objectives, strategy and operations, with the financial statements. This will be the foundation of how buyers approach valuation. Get credit for the value you’ve built and you’re on your way to a deal.

ALIGNMT’s Confidential Information Memorandum Template helps you hit key notes to open the dialog with prospective buyers by helping you cover:

  1. Executive Summary
  1. Business Overview
  2. Business Concept
  3. Market Description
  4. Value Proposition or Competitive Advantage
  5. Key Success Factors
  6. Financial Snapshot
  1. The Company
  1. The Business (including history)
  2. Product Overview
  3. Markets & Customers
  4. Industry Trends
  5. Key Personnel & Human Capital Needs
  6. Organization Chart
  1. Marketing Plan
  1. Products
  2. Market Analysis
  3. Competitive Analysis
  4. Pricing Scheme
  5. Sales Volume Potential
  6. Marketing Strategies
  1. Operating Plan
  1. Implementation Plan
  2. Supply Chain Management
  3. Production Plan
  4. Customer Service Plan
  5. Organization Chart
  6. Facilities Requirements
  1. Financial Plan
  1. Cash Flow Projections
  2. Financial Statements
  3. Break-even Analysis
  4. Financial Projection Support

©2022 ALIGNMT LLC | Financial Management | Mergers & Acquisitions | Investor Relations


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